Posted by: carboncreditsusa | November 17, 2008

New York Times OP-Ed “How High Gas Prices Can Save The Car Industry” Detailing $3.50 Per Gallon Gasoline Price Has It “Partially Right”

THE ESTEEMED NEW YORK TIMES HAS PUBLISHED A VERY WELL WRITTEN OP-ED ARTICLE ON THE ESTABLISHMENT OF A $3.50 PER GALLON GASOLINE PRICE FLOOR…BUT THE MECHANISM IS A “VARIABLE” GAS TAX THAT DISAPPEARS WHEN BASELINE PRICE GOES ABOVE $3.50…ENERGY ETHOS DISAGREES WITH THIS AS A “TAX” IS THE WRONG APPROACH…THE $3.50 NATIONAL PRICE SHOULD BE ALLOWED TO “RISE” AS THE BASELINE MOVES ABOVE $3.00 BY REQUIRING THERE TO BE A MINIMUM 50 CENT PER GALLON “ENERGY INDEPENDENCE FEE” (EIF) SPREAD…”TO PUT THE HAMMER” ON MARKET FORCES DRIVING UP WHOLESALE OIL AND REFINED PRODUCT PRICES…THE OBJECT IS TO FUND THE CRITICAL MOVE AWAY FROM OIL-BASED ENERGY SOURCES…THE LARGEST OIL COMPANIES IN THE WORLD ARE NOT INDEPENDENT, CORPORATE ENTITIES…THEY ARE STATE-OWNED “NATIONAL OIL COMPANIES” (NOC)…SEE TABLE BELOW FROM A “SEEKING ALPHA” ARTICLE…http://seekingalpha.com/article/106141-what-s-oil-s-future?source=email…THESE NOC’S FUND TERRORISM AT THEIR WORST AND ARE SUBSIDIZING AND FUNDING ENERGY INDEPENDENCE IN THE HOME COUNTRY AT THEIR BEST…MORE ANALYSIS TO FOLLOW….PUBLIUS
worldoiltable1
“…One way to do that would be to establish a price floor of $3.50 per gallon on gasoline. If the price drops below that, as it recently has, the federal government would impose a variable tax to bring the price up to $3.50. If the price goes above $3.50, then the tax disappears. The money raised by the variable tax would be used, at least in the short term, to provide loan guarantees to the auto companies….”

Op-Ed Contributors…”How High Gas Prices Can Save The Car Industry”..By DANIEL SPERLING and DEBORAH GORDON, November 16, 2008

http://www.nytimes.com/2008/11/16/opinion/16sperling.html?_r=1&ref=opinion&pagewanted=print&oref=slogin

FOR the American automobile industry, the years since the glory days of the 1950s and ’60s have been a period of decline. Ever since the oil crises and the Japanese import invasion of the 1970s, the automakers have repeatedly flirted with financial ruin.

They stayed afloat, at times quite profitably, by shifting their focus to sport utility vehicles and big pickup trucks, which indulged the desires of consumers for larger and more powerful vehicles. They deluded themselves into thinking they had created a successful strategy, when what they had really created was a protected and precarious perch.

Bankruptcy, then, might be well deserved, were it not for the risk of the complete collapse of the companies. The industry must be bailed out by the federal government. There are hundreds of thousands of jobs at stake, and a strong domestic manufacturing sector is important for security reasons.

Scarce American dollars, however, must be invested in the larger public interest. The best bailout is one that weans us off oil and sets us on a path to reduced carbon emissions. Congress and President-elect Barack Obama are not qualified to protect shareholders’ interests, nor can they build a better car. But they can ensure that society benefits from our investment in the automobile industry.

One way to do that would be to establish a price floor of $3.50 per gallon on gasoline. If the price drops below that, as it recently has, the federal government would impose a variable tax to bring the price up to $3.50. If the price goes above $3.50, then the tax disappears. The money raised by the variable tax would be used, at least in the short term, to provide loan guarantees to the auto companies. (To ease the burden of higher gasoline prices on low-income taxpayers, some of the revenue would be provided to them as tax credits or vouchers.)

A price floor for gasoline would ease the bailout’s burden on taxpayers. At current prices, a floor of $3.50 per gallon would generate more than $17 billion in one month — a big chunk of a $25 billion bailout. If, without the floor, gasoline averaged $2.50 per gallon over the next year, revenues would amount to $140 billion. That money could pay for a sound transportation policy agenda beyond the bailout.

To receive some of the money raised by this tax, the car makers would be required to produce large numbers of affordable, durable, safe, fuel-efficient, low-carbon vehicles within the next five years. They would also have to relinquish their fight against California’s clean car standards and accept national greenhouse gas standards for vehicles. The companies should also be required to sell a certain number of near-zero emission cars — electric, plug-in hybrids and fuel-cell vehicles.

The $3.50 price floor for gasoline would help sell these fuel-efficient cars. The higher the price of gas, the greater the demand for Detroit’s new, improved fleet. The price floor could be indexed to inflation, so that it rises over time, and it could be applied to diesel fuel, to avoid a widespread substitution from gas to diesel. A comparable price floor for oil could be calculated, to reduce the risk of manipulation of crude pricing.

The declining fortunes of the domestic automakers have paralyzed energy and environmental debates and stymied oil and climate policy for more than a generation. We’ve been down this road before. In 1980, Chrysler was reported to be within hours of bankruptcy, and Congress bailed out the company with $1.5 billion in loan guarantees and a package of concessions — from lenders, unions and others — worth billions more.

This time, the government has to be smart, steering the country to a more sustainable future.

Daniel Sperling, the director of the Institute of Transportation Studies at the University of California, Davis, and Deborah Gordon, a transportation policy consultant, are the authors of the forthcoming “Two Billion Cars: Driving Toward Sustainability.”

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